California DFI Order Hammers $5.5M Lithuanian Credit Union
A final enforcement order posted on the California Department of Financial Institution’s website reveals the state regulator has ordered the $5.5 million Lithuanian Credit Union to replace Manager Saulius V. Juodvalkis because DFI Commissioner Teveia R. Barnes finds him unacceptable.
The March 28 order also included a laundry list of improvements the Glendale, Calif.-based credit union must implement, including internal control policies and procedures consistent with safe and sound credit union practices.
According to its March 2013 financial performance reports posted on the NCUA’s website, the 603-member credit union has been building net worth after falling to 5.30% in September 2011. As of March 2013, the credit union reported 7.96% net worth after a steady climb over the past six quarters.
LCU reported 0.19% delinquent loans, and 1.21% net charge offs. As of March 31, the credit union had applied an $82,302 allowance for loan losses against $4.6 million in total loans. Apparently that wasn’t good enough for DFI examiners, which ordered the credit union to immediately fully fund its ALL in compliance with its exam report, and develop and implement an appropriate ALL methodology that complies with GAAP within 30 days.
Other changes the credit union must make to its loan programs include the development and implementation of policies and procedures that govern its maximum loan amount to collateral value ratio, the acceptable types of compensating factors used to approve loans that would not otherwise qualify for approval, and a directive to establish maximum aggregate limits for high-risk loan categories, as well as a maximum limit for each individual loan.
LCU must also develop and implement loan collection policies and procedures, and implement a system to ensure the adequate documentation of all contacts with delinquent members.
The order also directs the credit union to cease several operational and underwriting exceptions, including a ban on conducting a business operation on credit union property, making lending decisions in which a director, officer or employee receives a direct or indirect benefit, and a directive to cease payments to directors, officers or employees beyond set salary or wages.
Additionally, TCU must notify the DFI before incurring or paying any expense in excess of $500, or entering into a contract worth more than $500.
A call to the credit union requesting comment was not returned.
DFI spokeswoman Alana Golden said the regulator began posting final orders, including consent orders and terminations on its website, this year after a state law requiring the public disclosure was passed in 2012. She had no further comment on the LCU order